Is Bitcoin Losing its Dominance?

• The total market cap of stablecoins surged by 0.48% in seven days since May 2022.
• A surge in stablecoin valuation suggests an increase in liquidity across exchanges.
• Tether USD is the most traded crypto with a volume of $51B, followed by Bitcoin and Ether.

The total market capitalization of stablecoins has surged to $173 billion, a level not seen since May 2022. This significant increase in stablecoin demand could foreshadow a pullback in Bitcoin’s price as investors accumulate liquidity and await a favorable entry point.

According to data from DefiLlama, the total market valuation of stablecoins rose by 0.48% in the past week, reaching a new high since May 2022. The sector is currently valued at $173.013 billion, with Tether USD (USDT) holding a dominant 69.27% share and a market capitalization of $119.6 billion.

Read also: Brazil’s Crypto Soars on 42% Stablecoin Growth And Institutional Influx

CoinMarketCap data shows that USDT is currently the highest-traded cryptocurrency in the industry, with a massive volume of $51 billion. Bitcoin (BTC) and Ether (ETH) are ranked second and third, with volumes of $27.5 billion and $14 billion, respectively. 

Increased Stablecoin Market Cap Could Signal a Bitcoin Dip

A rising stablecoin market capitalization typically suggests increased liquidity on digital asset trading platforms. This may indicate that investors are waiting for a market correction to enter the market. As a result, it is possible that Bitcoin might dip slightly before stablecoins are used and exchanged for altcoins and BTC.

At the time of press, Bitcoin has surged 2.87% in the past 24 hours and is trading at $64,568, up 7.65% in the past month and 140.26% since October 2023. The leading digital asset saw a 69% surge in its trading volume and is trading at a discount of 12.37% from its all-time high of $73,750 printed earlier this year. 

As per the chart provided by TradingView above, the Relative Strength Index (RSI) for Bitcoin reads a value of 59.87 which means that the bulls are overall in charge of the cryptocurrency’s price action. Moreover, the gradient of the line suggests that higher prices are possible.